Harry Krantz Company, a leading distributor of
electronic components for defense applications has entered into a long term supply agreement with Northrop Grumman, Electronic systems to provide longevity of supply of RF controllers for the purpose of program sustainment.
The basis of the agreement is the procurement and maintenance of inventory at a fixed price, dedicated solely for the Northrop program’s consumption. “This agreement represents a new model of business to address the complications and risk inherent in
legacy program management due to product of obsolescence and DMSMS” says Jeff Krantz, CEO of Harry Krantz Company. “Harry Krantz has committed to acquiring and qualifying product on behalf of the program to ensure Northrop has 100% secured product
availability and price stability at the time of demand,” he continued “ however, the obligation for Northrop to acquire the product from Harry Krantz becomes firm only at the time that there is demand at the program level.”
At its core, this program alleviates the need for much of the speculative procurement that is done by defense contractors to maintain program sustainability. In doing so there is a
significant reduction of cost that flows up the supply chain all the way to through the end customer,” says Arie Wollenberg, Harry Krantz Sales Director.
The agreement could be considered a zero risk futures contract that commits Northrop Grumman to procure the product from Harry Krantz only at the time that they are in receipt of a contract to manufacture. “With this initial contract we have begun a
pilot program which, as we expand upon it, both across the product and program spectrum, we will be able to further reduce overall cost to our customer by spreading the overall risk more broadly” says David Friede, Chief Operating Officer at Harry Krantz.
"This transaction is based on the ability of Harry Krantz to establish a risk based pricing model that can lower overall cost to the customer and that gives them complete price reliability”
No one from Northrop Grumman was able to comment at the time of release due to company policy regarding third party suppliers.
For more information. Please contact Arie Wollenberg, Sales Director